Saudi Arabia and other OPEC+ oil producers on Sunday announced voluntary production cuts of around 1.15 million barrels a day to support market stability. The decision builds on a cut last fall, when OPEC countries and allies, led by Russia, announced two million production cuts from November through the end of the year, angering Washington as supply shortages drove prices higher. The news comes ahead of the meeting that producer countries will hold this Monday.
Instead, the United States is supporting lower prices to accelerate economic growth and prevent Russian President Vladimir Putin from receiving more revenue to fund the war in Ukraine. The unexpected voluntary cuts will start in May. Riyadh said it would cut production by 500,000 barrels, while Iraq would cut production by 211,000, officials said. The United Arab Emirates will take another 144,000 off the market; Kuwait 128,000; Oman another 40,000 and Algeria pledged to reduce its production by 48,000. Kazakhstan will also cut production by 78,000.
A barrel of Brent is currently trading at $79, a far cry from the $129 benchmark crude reached in Europe in March 2022, shortly after the outbreak of war in Ukraine.
Russian Deputy Prime Minister Alexander Novak also said on Sunday that Moscow would extend its voluntary cut of 500,000 barrels until the end of 2023. Moscow announced these cuts unilaterally in February after the West imposed price caps. After the unilateral cuts imposed by Russia, US officials slurred that their alliance with other OPEC members is weakening, but the measure launched on Sunday shows that, contrary to what the United States is aiming for, cooperation remains strong.
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